where r is the real interest rate. The first-order conditions for the optimization problem are: an, ir

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where r is the real interest rate. The first-order conditions for the optimization problem are:

an, ir = aL i aIi =

a II aL2 an

-14,1= 0, 8.47)

( 1 + = 0, (8.48)

+1-[FL(L2,Ki 0 — w21 = r) 0. (8.49)

207 1 U(w2) - UtEn

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Foundations Of Modern Macroeconomics

ISBN: 9781264857937

1st Edition

Authors: Ben J. Heijdra, Frederick Van Der Ploeg

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Question Posted: Nov 12, 2024 07:00 AM

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where r is the real interest rate. The first-order conditions for the optimization problem are: an, ir

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Foundations Of Modern Macroeconomics

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